Unholy real estate strategy: Catholic churches shuffle properties to shield billions from sex abuse victims, report says

At least 20 dioceses use bankruptcy and legal entities to limit payouts to victims

TRD NATIONAL /
Jan.January 11, 2020 12:00 PM
Pope Francis (Credit: WIkipedia, iStock)

Pope Francis (Credit: WIkipedia, iStock)

Catholic church dioceses across the country are moving around their real estate portfolios and using Chapter 11 bankruptcy to protect assets in sex abuse lawsuits.

Over the last decade and a half, the U.S. Catholic Church has shielded more than $2 billion worth of assets from people who were abused by clergy, according to a Bloomberg Businessweek report. In some cases, that has significantly reduced the amount of money available to compensate those victims.

More than 20 dioceses have chosen to go the bankruptcy route since 2004 rather than face lawsuits.

Before filing for bankruptcy, many of those dioceses reorganize their structures and reclassified assets or transferred assets to separate entities. Some have broken off individual parishes into separate entities and transferred assets to them.

In 2012, the Archdiocese of Santa Fe began individually incorporating parishes and transferring assets to entities legally separate from itself. The archdiocese filed for bankruptcy in 2018 while facing several dozen abuse suits that later climbed to 375 claims.

The archdiocese is arguing in bankruptcy court that it was worth just $49 million and that another $178 million worth of assets associated with the archdiocese was owned by parishes or held in trust or foundation, so isn’t part of its estate.

Some bankruptcy judges have sided with victims. The Archdiocese of Milwaukee put $57 million into a trust fund in 2007 for cemetery maintenance, in what correspondence with the Vatican suggests was meant to shield it from legal claims. Victims’ lawyers successfully argued that money should be included in the archdiocese assets, making that money eligible to be used to compensate victims. [Bloomberg Businessweek] – Dennis Lynch


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Renderings of 130-02 South Conduit Avenue and Triangle Equities’ Joshua Weingarten (Credit: Terminal Logistics)

Triangle Equities lands $87M loan for massive JFK warehouse project

From left: 172 Madison Avenue, 100 East 53rd Street, Woolworth Tower, 53 West 53rd Street, 615 10th Avenue

Loan wolves: Bankers are stalking developers as debts come due

State Sen. Julia Salazar and Assembly member Harvey Epstein proposed the tax this month in an effort to disincentivize real estate speculation (Credit: iStock, Getty Images)

Experts take issue with proposed tax on mezzanine loans

Brookfield's largest-ever $15B property fund has invested in properties from New York (666 Fifth Avenue) to Bangalore (the Leela Palace hotel) (Credit: Brookfield, Getty Images, Leela)

Real estate fundraising hits lowest level since 2013

Some investors continue to find U.S. commercial real estate as attractive places to park their capital (Credit: iStock)

Brexits and Bubbles: How investors view Europe’s shaky real estate market

(Credit: iStock)

Real estate created the Chinese elite. Here’s what happens next

arrow_forward_ios
Loading...